09/10/2013 06:20 BST | Updated 07/12/2013 05:12 GMT

Why Have the Millenium Development Goals Performed So Well on Safe Drinking Water but So Poorly on Sanitation?

As the 2015 end-date of the MDGS draws near, a puzzle remains: why has the target on clean water been surpassed, while progress on sanitation has been so poor? Surely water, sanitation and hygiene (WASH) go together? This question goes to the heart of the MDG worldview, and the problem of measuring development generally.

The number of people with access to safe drinking water increased from 76% of the world in 1990 to 89% in 2010, an impressive achievement given population growth. This exceeded the target by five years.

However, halving the number of people without effective sanitation is considerably off-target, with only a 20% reduction between 1990 and 2010. In addition (and this is an important bit that is often skipped over) data for sanitation is harder to come by than for clean water, so there is less known about the former than the latter.

What explains this divergence? For one, water is not 'owned' by any UN agency working towards the MDGs, but rather shared between several. The Food and Agriculture Organisation is the lead agency reporting on it for the MDGs, and UNICEF and the World Health Organisation operate a Joint Monitoring Programme on Water Supply and Sanitation (JMP). A separate body, UN Water, coordinates work across the UN but has no independent budget, which is why few have heard of it.

In some respects water and sanitation illustrate the strengths and weaknesses of the MDG worldview, and indicate the direction of travel for development thinking as 2015 approaches and Sustainable Development Goals take over.

The MDGs, perhaps the high-water mark (excuse the pun) of a technocratic, top-down, structural approach to development, achieved great success on clean water, but ran into difficulties with the less technical, more systemic, problem of sanitation.

The organisation that Matt Damon set up,, claims with justifiable outrage that more people in the world have a mobile phone than access to a toilet. However, statements like these confuse process with outcome. Rather than outcomes, it is systems that are critical, and these depend on the effective alignment of incentives, rather than on proactively spending money to fix one thing or another.

Abhijit Banerjee and Esther Duflo's influential book Poor Economics talks about an asymmetry of incentives - why, for example, when many studies show that for a health programme such as bed nets for malaria, which is actually fairly cheap and returns on investment are so high, is the uptake so low for the very poorest and most vulnerable who would benefit most from such investment? Even more puzzling, why is uptake still slow even when bed nets are distributed to the very poorest for free?

The answer seems to lie in psychology as much as in economics. If a Cameroonian farmer has one tonne of grain to sell on the market, and a commodities trader in New York has 100 tonnes, orthodox economics would say that the Cameroonian farmer has only 1% of the risk and so would make 1% of the profit of the New Yorker. So why does the trader typically make more than 100 times the profit, even when economies of scale are accounted for?

Similarly, why is it that even with fewer resources the Cameroonian farmer may spend a lower proportion of his income than the New Yorker on his health, even with greater threats from infectious disease? It turns out that economic incentives seem to be different for the poor than for the rich, and development specialists don't really understand yet why this is. Spending $20 on a new latrine is an effective investment if you live on $10 a day. But if you live on $1 a day you may never save twenty days' worth of income, so avoiding diarrhoea may seem, psychologically, like a different order of risk to going hungry for twenty days in a row to pay for it.

The problem of water and sanitation seem to mirror a larger debate within development, one that is often reduced to a simplistic argument between rock-star economists, the struggle between 'Activists' such as Jeffrey Sachs, who believe that programmes such as the MDGs can provide a surge of attention to break the inertia of the poverty trap, and 'Sceptics' such as William Easterly, who believe that most development problems are failures of governance rather than of technology.

It also highlights what Afrobarometer call 'Lived Poverty', that is the qualitative experience of poverty felt by poor people, not just the quantitative measure of what economists might think is important. An effective successor programme to the MDGs after 2015 will need to find ways to demonstrate this lived poverty that is so persistent even given recent progress. Figuring out how to provide effective sanitation along with clean water would be a good start.